The Economics of Walkability

Aug 9, 2012, 11:46 AM

Idea Gallery is a recurring editorial series on NewPublicHealth in which guest authors provide their perspective on issues affecting public health.

We all know that living in a walkable neighborhood is good for your health. The more surrounded we are by trees, water and parks and the more we are within walking distance of meaningful places for daily needs, the more likely these destinations are a part of our day-to-day lives. In a recent op ed for the New York Times, Christopher Leinberger comments on a new Brookings Institution study he co-authored with Mariela Alfonzo, PhD, a research fellow at Polytechnic Institute of New York University, which shows that more walkable neighborhoods also fare better economically. In this Idea Gallery for NewPublicHealth, Leinberger expands on the benefits of walkability for a community.

The takeaway from our report is that there’s been a structural shift in how we build the built environment. This is not a cyclical change caused by a periodic recession. This is a structural shift. The last time we had this was after the Second World War. We’re building fundamentally a different America.

Before you build it you have to be sure that you have the strategy and management structures in place to make it happen. Generally in this country, walkable urban development is illegal—there is no zoning in place to allow it to happen. Plus it works best when the place has a strategy and management entity in place, generally taking the form of a non-profit building improvement district (BID).

There is then the possibility of achieving the triple bottom line: 1) make money, 2) be responsible to the environment, and 3) be socially equitable.

On social equity, certain jurisdictions in this country have said we want a mix of incomes in our neighborhoods, and I believe this is the proper approach. The price premiums telling the real estate industry to build more also portend an inability for working- and even middle-class buyers to live in walkable urban places.

Three careers ago, I used to own the country’s largest real estate consulting firm. We would work with real estate developers and tell them, ‘In this master plan community pod, you’ll be attracting households that make $80,000 per year. Over here in this pod, we’re going to be attracting people that make $120,000 per year.’ Heaven forbid they should ever have anything to do with one another. In so much of our country today, the only time we see different kinds of people, people fundamentally different from ourselves, is on the 5:00 news. We just reinforce this otherness in our society. Against this backdrop, urban walkable spaces help create the momentum for equity.

Walkable urban places are fundamentally different. Not that everybody is going to be singing Kumbaya, but you’re going to walk past people that are different on the street and realize they’re human too, and while you may not have a homeless person as your best friend, at least you know that they’re human.

When you thought of walkable urban places 20 years ago, many baby boomers–who were then dominating the market—associated walkable urban areas with crime, and the suburbs with safety. Millennials are driving a new trend. The millennials want to live in a mixed income place. They don’t want it to be homogenous. Today the market wants walkable urban places, and we know that from all the research of the price premiums that people are willing to pay for walkable urban places.

As I wrote in the Times op-ed, demand for walkable urban space extends beyond city centers to suburbs. In metropolitan Washington, more than half of the walkable places are in the suburbs, like Reston Town Center, 22 miles from downtown Washington; Ballston, in Arlington County; and Silver Spring, in suburban Maryland. Residents can easily get to grocery stores, cafes, libraries and work by rail transit, biking and walking.

Making places ever more walkable will decrease their cost. That’s because there are two factors that make walkable urban housing more expensive—it just costs more to build walkable urban product. It’s higher quality. You’ve got better foundations. It has real architecture. The other reason is because we have a shortage of walkable urban land and that’s where we can begin to get the prices back down eventually. By building more in existing walkable urban places and creating new places, we will drive down the cost of land.

One force pushing the concept forward is that the market is giving us price signals to build more. And on the other hand, the market has devalued drivable suburban product, many times to less than what it costs to build it in the first instance, even assuming the land was free. Those price signals are what tells real estate developers and the lenders what to build and where.

Lenders and investors have formulas and they get used to building and lending on certain kinds of drivable suburban real estate. They’re in shell shock from the mortgage meltdown, for which the catalyst was the collapse of the drivable suburban fringe. But look at new construction and you’ll see that probably 50 to 70 percent of all the real estate – and particularly the rental housing that’s going up – is in walkable urban areas.

Today I’m more optimistic than I’ve ever been because we’re rebuilding our cities, we are urbanizing our suburbs, and people are going to be moving into far more environmentally sustainable communities.

So, how do we do it? The Founding Fathers did a phenomenal job with our Constitution, but when we had four million people in this country, they didn’t anticipate 310 million people, as they created three levels of government (federal, state and local). Well, we have two missing levels of governance that we need. One is at the metropolitan level and one is at the place level. We have to create governance structures, and the best models are nonprofit organizations that are providing governance of these places and often building the parks and streetcars that connect them.

There is a role for all of us, at the neighborhood group level, at the place management level. This is really more about reknitting together a society. It is in contrast to the privatization of the late 20th century, which allowed people to check out of their responsibility to the larger community. This is a reversal of that and it’s very positive for our society.

About the Author

Christopher Leinberger is the president of Locus, a coalition of real estate developers and investors, and a project of Smart Growth America, which supports walkable neighborhoods and transit-oriented development. He is also the Charles Bendit Distinguished Scholar and Research Professor of Urban Real Estate at George Washington University School of Business.

This commentary originally appeared on the RWJF New Public Health blog.